This chapter argues that blockchain technology enables start-ups and small and medium-sized companies to raise funds from a multitude of investors on a peer-to-peer basis without the involvement of an intermediary. It discusses the phenomenon of initial coin offerings (ICO), illustrates with concrete examples, and reviews the legal framework governing ICOs. Using the potential of distributed ledger technologies, ICOs have emerged as a novel mechanism for financing entrepreneurial ventures. One of the main challenges related to the legal regulation of ICOs is the functional diversity of the tokens issued in crowdfunding campaigns. Tokens can be linked to different types of rights, such as membership rights or property rights. A key aspect regarding the financial market regulations of ICOs is whether the tokens qualify as securities. A fundamental problem for the said qualification lies in the different definitions, depending on the applicable jurisdictions.
The emergence of digital financial technology, such as blockchain, cryptocurrencies, and decentralized finance (DeFi) has created new opportunities in the field of financial inclusion, although gender differences are still very strong. The research paper examines the acceptance and effects of Web3 financial tools on the economic empowerment of women, the access and use as well as the financial literacy levels of women in the developed and emerging economies. The research design is a mixed-method study that will involve quantitative data based on blockchain transaction data, the use of digital wallets, and financial inclusion indicators, and qualitative data collection based on structured interviews and focus groups with female users and fintech providers. The results show that there are also a great difference in the adoption: women in technologically developed areas are better equipped with access, financial literacy, and institutional support, and women in resource-deprived regions have challenges with limited internet connectivity, lack of digital literacy, and socio-cultural constraints. In spite of such difficulties, Web3 technologies can contribute to making women more financially independent through facilitating inexpensive and safe transactions, decentralized savings, and having access to alternative credit structures. In addition to this, the user interaction also indicates subtle preferences: digitally literate users prefer convenience, transparency, and privacy, whereas the less digitally equipped ones focus on trust, education, and community support. Strategic interventions presented in the paper, such as female-sensitive policy models, specific financial literacy interventions, and onboarding strategies driven by communities, are also suggested to facilitate fair involvement in the Web3 ecosystem. Through the identification of both prospects and obstacles to digital finance that is inclusive of gender, this paper illustrates that Web3 can be used as an empowering opportunity in the economy and financial sustainability. The findings can be added to the increasing body of research on digital finance and presented as evidence-based policies to help policymakers, fintech developers, and advocacy organizations to enhance the gender gap in digital financial technology adoption.
Local governments have been created as agents of local development in which the people in the local areas are given greater opportunities to influence policies and programs that directly affect their well-being and thereby reducing their poverty levels. But the implementation of the policies and programmes is bedeviled with many problems. Key among them is the issue of financing the local development projects in order to reduce rural poverty. The government of Ghana attempted to reduce this problem when it introduced a development fund in1994 known as the – District Assemblies Common Fund (DACF) to encourage local governance and deepen Government’s commitment to decentralization in general and fiscal devolution in particular. The study therefore, seeks to assess the impact of District Assembly Common Fund on Local Government Development in the Adaklu District Assembly in the Volta Region of Ghana. The study mainly adopted qualitative methods of research to obtain information on the experiences of the poor people in the Adaklu communities selected as study areas. Interview guides were used to obtain information from the people in the communities, staff of the Assembly and some heads of the decentralized departments. A major finding of the study is that the assembly did not involve the rural people in the poverty reduction programmes in the district.
As criptomoedas surgem como uma maneira diferenciada de se efetuar pagamentos, principalmente no âmbito online. As criptomoedas se tratam de um modelo de moeda virtual cujas principais características são a descentralização e o anonimato de seus usuários. O presente trabalho buscou relacionar as criptomoedas com o setor do turismo, tomando por base um levantamento bibliográfico para compreender o que são as criptomoedas e o seu funcionamento, seguido de uma análise de 255 notícias em portais de notícias especializados em negócios que tratavam de criptomoedas e suas aplicações no mercado. Com isso constatou-se que as cinco criptomoedas mais utilizadas para venda de serviços turísticos são o Bitcoin, Litecoin, Bitcoin Cash, Ethereum e DASH. Algumas características dessas criptomoedas como o seu preço e taxa para realização de transação foram abordadas na pesquisa para melhor entender como elas poderiam ser implementadas no setor turístico. Conclui-se que as criptomoedas são uma forma diferente de se efetuar transações que pode trazer comodidade e ao mesmo tempo riscos para os turistas. Agradecimentos ao CNPq pela concessão de bolsa para realização da pesquisa.
The intersection of finance and technology, known as fintech, has resulted in the dramatic growth of innovations and has changed the entire financial landscape. While fintech has a critical role to play in democratizing credit access to the unbanked and thin-file consumers around the globe, those consumers who are currently well served also turn to fintech for faster services and greater transparency. Fintech, particularly the blockchain, has the potential to be disruptive to financial systems and intermediation. Our aim in this paper is to provide a comprehensive fintech literature survey with relevant research studies and policy discussion around the various aspects of fintech. The topics include marketplace and peer-to-peer lending; credit scoring; alternative data; distributed ledger technologies; blockchain; smart contracts; cryptocurrencies and initial coin offerings; central bank digital currency; robo-advising; quantitative investment and trading strategies; cybersecurity; identity theft; cloud computing; use of big data, artificial intelligence. and machine learning; identity and fraud detection; anti-money laundering; Know Your Customers; natural language processing; regtech; insuretech; sandboxes; and fintech regulations.
The United Republic of Tanzania explicitly recognizes the human right to water and sanitation in its constitution. However, full implementation of this right has been complicated by Tanzania’s ongoing decentralization process for water governance, which has created a significant public financing gap for cash-strapped rural water schemes. Under the framework of the progressive realization of the human right to water, this thesis examines the potential for digital credit financing to bridge the public financing gap for rural water schemes in Tanzania. The thesis utilizes (1) country-wide data on digital financial inclusion and rural water access and (2) two case studies of digital credit financing in the rural water sector to explore the viability of a digital credit financing model. This thesis challenges sector-wide intuition on a “cost-recovery” model for rural water financing, instead arguing in favor of a “cost-reduction” model that prioritizes the use of debt financing for cost-reducing asset improvements, such as low-maintenance solar pump technology. It further finds that the weak regulation of the digital credit industry creates a major risk of predatory lending toward financially-illiterate consumers and outlines clear delineations of responsibility for various government agencies in regulating lending terms and providing technical assistance for rural water schemes. Finally, the thesis explores opportunities for cross-subsidization to ensure that the improved financial sustainability of water schemes does not come at the cost of equitable access to water for the rural poor.
We analyse the determinants of success for 630 ICOs undertaken from August 2015 up until the end of December 2017, a period in which the market for ICOs grew to an unprecented level. We find evidence that ICOs are more successful in raising funding when they disclose more information to investors (i.e. have a higher profile rating), have a higher quality rating by cryptocurrency experts, have a pre-ICO GitHub repository, organise a presale, refrain from offering bonus schemes, have shorter planned token sale durations and have a larger project team. ICOs that disclose more information to investors and that have a higher quality rating at the time of the campaign show stronger ex-post performance. Longer-term project success is positively impacted by having a pre-ICO GitHub repository, a shorter planned token sale duration and having a larger project team at the time of the ICO, although these results depend on the ex-post success measure used. We conclude that for entrepreneurs it is important to make an ICO as transparent as possible and that profile and expert ratings are a valuable means to overcome the information asymmetry problems associated with token sales.
Crowdfunding is an innovative way of financing projects that allows anyone to contribute money online and support various initiatives, such as businesses, causes, or solutions. However, traditional crowdfunding platforms face some challenges, such as lack of transparency and security, high fees, and limited control over the funds by the contributors and the project owners. Blockchain technology, which is a P2P, decentralized ledger, which is distributed can offer a more reliable, secure, and transparent solution for crowdfunding. Blockchain-based crowdfunding can leverage smart contracts, which are self-executing agreements that encode the rules and conditions of the funding process and ensure that the funds are released only when the predefined criteria are met. This paper aims to propose a concept for designing efficient smart contracts for crowdfunding, which can enable both the contributors and the project owners to have more control and influence over the funds and the project outcomes. Unlike the existing literature-based ideas, our proposed method not only allows the contributors to invest their own money, but also guarantees them that their token values will be preserved. This method can be integrated without disrupting the existing logic of the blockchain. The methodology provides higher control and transparency for all the parties involved in the crowdfunding process.
<em>This article looks at whether financial regulations and Government policies have an impact on microfinance institutions operations in Ghana. It also looks at contributions that regulations and policies have on microfinance sector development in the country. The methodology for this paper is purely qualitative. The needed information was gathered from primary & secondary sources. The primary data source used face to face interviews, telephonic and through emails conducted with regulators, policymakers and microfinance institutions managers, using interview guide and focus group discussion guide. The secondary source was through literature reviews, books, journals, and the internet. The study revealed that financial regulations and government policies have contributed immensely to microfinance sector development through, training & capacity building, checks & balances, protecting customers & depositors, financial soundness and financial inclusion. However, despite the contribution of regulations and the policies to the sub-sector, the result of the study also identified poor regulations, lack of proper decentralization, lack of knowledge and weakness of regulators as problems with financial regulation. Furthermore, it also found out that, the policies formulated are weak and the implementation, monitoring, and supervision of the institutions is insufficient and ineffective. This article, therefore, recommends that Apex bodies should be involved in monitoring and supervision, minimum capital requirements should be made moderate, powers should be decentralized to the regional level for the effective functioning of regulations & policies in the country.</em> <strong><em>Keywords</em></strong><em>: Bank of Ghana, Regulations, Ministry of Finance, Policy Formulation, Microfinance Institutions.</em>
Technological advancements in the provision of financial services are transforming the economic landscape by providing opportunities for financial institutions, corporate sector, and consumers. Financial technologies (fintech) offer broader economic development and inclusive growth and facilitate international payments and remittances. Fintech applications, such as mobile wallets and crowdfunding that are hugely successful, especially in developing countries such as India, are examples of how simple technologies can enhance financial inclusion through the decentralized provision of payments, borrowings, and risk management. However, these innovations also create challenges for regulators. The emerging fintech models raise concerns on investor protection, adequacy of existing regulations and potential threats to financial stability, leading to questions on the policies and institutional framework required to tap into the benefits of these technologies securely. In this paper, we look at the landscape of fintech companies and their suitability for financing sustainable development. The paper also examines the policy and institutional frameworks required for the effective utilization of fintech for sustainable development. Fintech has the potential to involve the private sector to finance sustainable development and hence the paper would be of interest to policymakers, particularly in developing countries, as many struggles to bridge gaps in financing their sustainable development goals (SDGs)
The present paper analyzes the potential of crowdfunding as an alternative source for financing the economy, but also the limitations of the process and the current gaps. Structured as a practical guide in the field, the study offers examples of crowdfunding platforms, systemizing the theoretical background of the concept in accordance with the Romanian context. Community financing is still poor understood by the Romanian public, the analysis focusing on a consistent literature review that reach the mechanism and the main typology of the crowdfunding platforms, defining the concept and exploring its novelty. Legal regulations and technological development are also considered in the frame of the Industry 4.0, revealing the advantages of using the Fintech tools for both investors and entrepreneurs. Due to the distributed risks, the crowdfunding platforms make easier the investment effort, while still protecting the rights of the capital-seeking. The next step of this evolutionary process is the integration of the blockchain technology in the crowdfunding system, adding substantial features as: anonymity, decentralization and transparency.
Fintech in simple terms is leveraging technology to deliver banking and financial solutions to individual and enterprise customers. This is one of the fastest-growing sectors in both developed & developing countries with India amongst the top three fintech startups globally. Blockchain, Cryptocurrency, AI, Data Analytics, Machine learning, Big data, Robotics, and Cloud are some of the top technologies leveraged by fintech firms to deliver products. Domestic & global broadband connectivity setup by telecom service providers made available basic infrastructure needed for fintech growth. One of the early fintech innovations was the installation of the first ATM by Barclays Bank in 1967. Post global financial crisis in 2008, many ex-employees of financial firms came up with innovative fintech products. The objective of this paper is to identify globally emerging fintech trends. The Qualitative research methodology was used relying on a review of literature, discussion with the professionals and researchers. The emerging trends include IMF focus on leveraging fintech for cross border payments using distributed ledger technology, Augmented reality for customer satisfaction, Digital insurance, Digital invoicing, Crowd-funding, Crowd investing, Robotics investment advisory, Future relationships between Banks and Fintech firms, Central bank regulatory role. It also came out that although there are many research papers on fintech globally, however, there is not much research work carried out on fintech in India and there is an opportunity for further research on innovation and growth of fintech in India.
Several blockchain-based financial technologies and cryptocurrencies have been launched for low-income people. Blockchain?s technical potential can be used to serve the needs of unbanked and underbanked populations, but there is no evidence that these needs are being met.
The modern financial technology (“FinTech”) revolution has two features that distinguish it from previous eras of innovation: (1) Consumers have greater access to financial information and applications using smartphones on high-speed networks; and (2) businesses benefit from dramatically lower costs, improved performance, and enhanced options in data storage, computation, and application development. The once monolithic and proprietary financial services industry is being challenged under the zeitgeist of decentralization, disintermediation, and open protocols. Consequently, households in the United States are witnessing the emergence of new options for investment, credit, insurance, and payments. We illustrate how several influential FinTech trends may help address biases and constraints that hamper households in smoothing intertemporal consumption.
Canada has a stable financial system with large national banks that integrate fintech internally to improve operations, products and service. Because of the size and stability of its major banks, Canada has been criticized as lagging globally in consumer fintech adoption rates and fostering new fintech market entrants. The supervisory frameworks for non-bank fintech firms in Canada has some agency fragmentation costs, which can serve as a barrier to entry for new firms. The following report outlines the law of fintech, as it applies in Canada, including the regulatory frameworks for fintech money (e-money, virtual currency and electronic payments); fintech financings (initial coin offerings, peer to peer lending and invoice trading); and fintech financial services (smart contract investing, robo-advisors, algorithmic trading and market automation, artificial intelligence, decentralized autonomous organizations, and crypto hedge funds).
In recent years, the term “blockchain” has been sprinkled widely and the hype around it attracts billions in investments. The promises that this technology can be a solution to many of society’s present problems have drawn attention from all sectors, including development aid. The historical recognition of potential and actual corruption resulting from development aid sparked a rise in demands for more transparency and accountability in this sector. So far, there have been reflections in different academic disciplines about the potentials of Blockchain in this area. However, little empirical investigation has been conducted to understand the technological and institutional enablers and barriers for its adoption in the development aid sector. This study aims to take initial steps towards such understanding with a focus on the potential role for Blockchain Technology in financial aid flows through an analysis of the donors’ perspectives. Our research is based on diverse qualitative material. It relies on reports and discussion papers produced by donor organizations and on case studies of two start-ups focused on introducing Blockchain into development aid management. Besides a body of archival qualitative material, we conducted interviews with different actors in the development financing field. Based on an inductive qualitative methodology, we grouped findings into three categories of barriers and enablers: discursive, technological and institutional. Our study shows that discourses about Blockchain Technology vary a lot and there is a lack of common framing of its definition, attributes, and insufficient engagement around these concerns between different actors. Overall, the ability to increase the visibility of cash flows and a potential to reduce administration costs were perceived to be the most useful features, combined with the desire/need expressed by some donors to be at the forefront of technological developments. Lack of understanding about this technology and fear of its complexity and related security challenges were the most cited technological obstacles. Lack of institutional structures for rule making and for enabling field-level exchanges and knowledge production around Blockchain-based projects is currently the most prominent challenge to its diffusion and wider adoption.
Since their emergence, blockchain technologies have shown potential for financial inclusion and the formalization of remittances. Recently, regulators and practitioners have studied the capabilities of blockchain technologies to streamline and, potentially, replace the infrastructure underpinning cross-border payments and remittances, i.e., correspondent banking. Correspondent Banking Relationships, also called “Nostro-Vostro accounts,” are continuous bilateral arrangements that enable banks to provide services in countries where they do not directly operate. After the Global Financial Crisis, this infrastructure has undergone “de-risking,” i.e., a reduction of correspondent accounts and their concentration in fewer financial institutions, with especially detrimental effects on costs and speed of retail cross-border remittances. The existing literature has mostly focused on the point of sale of remittances, often overlooking correspondent banking. This paper, in contrast, connects remittances, blockchain technologies, and correspondent banking with the growing interest of critical social science in the significance of payment infrastructures for the constitution and configuration of money, finance, and markets. By unpacking the critical case of Ripple, this paper shows that blockchain applications to remittances focus on profits, risks, costs, interoperability, “trapped liquidity,” and “idle capital” in correspondent banking accounts, rather than on financial inclusion per se. In so doing, this paper contributes to critical social studies literature on the formalization of remittances, understood as the transformation of remittances into a market frontier. Blockchain applications are shown to foster, rather than resist, remittances formalization, and they are presently being incorporated into existing infrastructures, business models, and regulatory structures. Rather than representing radically alternative monetary systems, blockchain technologies are the latest iteration of technologies heralding frictionless capitalism. Lastly, this paper shows the tensions and ambiguities inherent to interoperability and formalization. Blockchain technologies are dynamic in a way that problematizes dichotomies such formal-informal and mainstream-alternative. Hence, rather than providing a quantitative assessment of the impact of blockchain technologies, this paper investigates the ambiguities and tensions in the political economy and imaginaries inscribed in the materiality and design of blockchain-enabled payment systems.
Project Stella studies the possible use of distributed ledger technology (DLT) on financial market infrastructures (FMIs). DLT solutions have the potential to improve the safety and efficiency of existing systems, as shown by research undertaken by central banks and FMIs. Yet, balancing performance and network size with the distance between nodes, as in the case of Stella phase 1, or the flexibility of cross-ledger delivery-versus-payment (DVP) using hashed timelock contracts without connection between ledgers and liquidity efficiency, as in the case of phase 2, remains a challenge. Project Stella studies the possible use of DLT for FMIs, including large-value central bank RTGS systems. Phase 1 implemented the processing logic of the standard liquidity-saving mechanisms in a DLT environment, and the analysis found that an application could meet the performance needs of an RTGS system. There is a trade-off between DLT performance and network size or distance between nodes. DLT solutions have the potential to strengthen resiliency and reliability. In phase 2, the project team proved that cross-ledger DVP could function even without any connection between individual ledgers. Hashed timelock contracts and digital signatures would be used to achieve interoperability between ledgers, while liquidity efficiency and settlement speed may be negatively affected as a result. DLT solutions have the potential to improve safety and efficiency of existing systems adopted at FMIs, yet balancing diverse system requirements demands careful analysis and consideration. As shown by increasing research and proofs-of-concept on DLT undertaken by many central banks1 and securities exchanges in major jurisdictions, there are both opportunities and challenges for further exploration.
The unique combination of social and economic factors has brought about a dynamic and rapidly-evolving blockchain ecosystem in Asia. This paper systematically reviewed the development of four fast-growing blockchain hubs in Asia, namely China, Japan, Singapore and South Korea using secondary data sources. These countries are fast-growing based on the development of its digital, technological and regulatory infrastructure, patent applications, cryptocurrency trading volume and Initial Crypto-token Offerings (ICOs) activities. The review included insights into the different regulatory approaches, the blockchain startup scenes, selected enterprise or government-backed projects, as well as the research and educational landscape. Our findings suggested that the regulators, industry players, and academic institutions were purposeful and deliberate in nurturing blockchain technology innovation. Future development would be dependent on the regulatory, technological, as well as talent capability support unique to each blockchain hub.
This paper is a review of the literature on fintech and its interaction with banking. Included in fintech are innovations in payment systems (including cryptocurrencies), credit markets (including P2P lending), and insurance, with Blockchain-assisted smart contracts playing a role. The paper provides a definition of fintech, examines some statistics and stylized facts, and then reviews the theoretical and empirical literature. The review is organized around four main research questions. The paper summarizes our knowledge on these questions and concludes with questions for future research.
This paper tends to examine cryptocurrency and its permissibility in the structure of Islamic banking finance. It identifies the major types of cryptocurrencies and also revealed its benefits. Despite these benefits and relating it to Islamic finance it was viewed from two angle; cryptocurrency and money in Islam and also cryptocurrency and the principles of Islamic finance. The study revealed it is compatible to structure of Islamic banking and finance when compared side by side to the features of fiat money which is currently in use. More so, the study clears some of the key issues like its legal tender, issuer unknown, money laundering & illicit purpose etc usually raised against cryptocurrency. The study concluded that cryptocurrency as an economic innovation has secured a pass mark to fit into the structure of Islamic banking and finance. The study further recommends that there is need to create standards guiding its operations, further ensure full disclosure on its transactions etc.
Focus on a concrete project, share the results, contain the risk. These are some of the precepts of Islamic finance. But they are also the cornerstones of crowdfunding. This is why this form of financing is cutting out its space. With an extra pillar: no interests. The resources are still limited, but the Muslim crowdfunding ecosystem is diversifying: from the most basic reward based on social lending, with an eye to the Fintech. FinTech refers to technofinance or financial technology, that is to say, the supply of services and financial products provided through the most modern technologies made available to ICT. The services provided by FinTech are essentially those of traditional finance: therefore, from simple transactions to payments, to brokering and risk management, typical and exclusive of this sector are the activities linked to electronic currencies such as for example, the Bitcoin.
Transferring money and gaining access to credit across international borders, is still complicated, time consuming and expensive. Existing money transfer systems suffer furthermore from long lines, exchange rate losses, counter-party risks, bureaucracy and extensive paperwork. An estimate two billion adults are unbanked and with no, or limited access to financial services. Providing workable financial services to this population is often tagged as a key step towards eliminating world poverty and bootstrapping local economies. The Everex application focuses on easing the financial inclusion problem by applying blockchain technology for cross-border remittance, online payment, currency exchange and micro lending, without the volatility issues of existing, non-stablecoin cryptocurrencies. Finally, the Everex wallet facilitates a fiat-to-cryptocurrency gateway that eases access to cryptocurrencies, thereby enabling our users to instantly buy and sell tokens without having to visit an exchange. This paper fills the gap in the state of the art by presenting a blockchain-based capital transfer system that aims to lower financial inclusion barriers and provide financial services to the unbanked. We present the advantages of the system, outline the requirements and goals, as well as the architecture of the Everex financial ecosystem.